Many homeowners and consumers across the nation have been burdened with credit card debt over the past months or years due to the fact that a slow economy and struggling job market have caused job loss and cuts in wages for workers. In these cases, more and more consumers have turned to credit card use in order to meet monthly financial obligations or pay for the most basic necessities. However, some of these formerly troubled cardholders have been able to begin combating their credit card debt and are using a variety of means with which to pay off their credit card debt quickly.
There have been individuals who use credit card debt consolidation loans in order to roll various credit card debts into one loan. This can make credit card debt easier to combat simply because there is only one monthly payment required on the debt consolidation loan and a cardholder is only handling one interest rate.
However, some believe that consolidation loans, when only minimum monthly payments are met, will cost more overall and have chosen to attack credit card debt separately so that the smaller amounts can be paid off in a timelier manner. There are cardholders who have been able to make payments on various credit card debt and erase these debts faster since, again, smaller amounts are being paid down rather than one large lump sum that comes with a consolidation loan.
Also, while home loan interest rates have been low, there have been homeowners who have chosen to use cash-out refinancing as a way to gain access to funds from the equity they have built in their home to pay off credit card debt. Mortgage interest rates are typically lower than interest rates on credit cards but there can be both an upside and downside to using a mortgage to pay off credit card debt. While many homeowners may have enough equity to pay off their credit cards, attaching unsecured debt to a home loan could be problematic if a homeowner cannot meet the requirements of paying down this higher amount on their home loan.
Typically, cardholders have simply looked at their financial situation and credit card debt predicament in order to proceed with a plan that is best for their personal credit card debt circumstances. While all of these credit card debt repayment methods can be helpful, it will be dependent upon a cardholder’s financial ability to deal with their debt through one of these plans or another as to which is best, so forethought and planning must be used before choosing a credit card debt repayment strategy.